The S&P500 ($SPX) rallied higher last week, with Thursday's strong move putting the market back in rally mode.
2021-10-17-SPX Trendline Analysis - Daily
Prices cut through the bearish trendline, and the index closed at it’s 50-day. Trading volume showed a follow-through day as well, putting the price/volume signal back into a uptrend. With a new rally in play, the distribution day count gets reset.
Friday's close had the ADX directional indicators cross-over by the slimmest of margins. Since they're essentially equal, the signal shifted to mixed, with the full expectation it will turn into an uptrend shortly.
2021-10-17-SPX Elliott Wave Analysis - Daily - Primary 1
For Elliott Wave, market action confirmed the bullish story told by technical indicators last week. The S&P might encounter some resistance as it tests a former support trendline, so it's still possible that the S&P500 retests something close to 4300.
Longer-term, initial expectations are for Intermediate Waves 1 and 5 to be similar. Intermediate Wave (1) rose 1396 points over 13 weeks. If Intermediate Wave (5) is similar, then we’re looking for a ~1400 pt move from the Wave (4) low over the remainder of 2021. I admit that kind of pattern is hard to imagine right now, as it corresponds to a rally of 27%% from Friday's close by the beginning of next year (5674 by the first week in January 2022 to be specific)!
Banks kicked off the Q3 earnings season with a strong showing. And September retail sales numbers came in strong last week, with a ~14% increase in retail spending over last September.
On the consumer side, inflation is still running above target...not that you needed a report for that info. You see it everyday whenever you spend your money! But it's even having a large impact on the cost-of-living adjustment for Social Security now, and that hasn't happened in a long time. The 2022 increase will be almost 6%, and that's the highest adjustment 1982!
Best to Your Week!
Charts provided courtesy of stockcharts.com.
Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.
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